Managing Debt

In challenging or encouraging economic times, understanding how to
manage debt is important for your financial health. Sometimes it
can be overwhelming.

If you're feeling that way, remember, you're not alone. There are
many solutions that can help make debt manageable. But just as it
takes time to get into debt, it can also take time to get out of
it.

Here are some guidelines to help you manage and reduce your
debt:

• Create a budget and stick to
it. Budgets can help you gain control of your debt and
manage future spending.

• Prioritize your outstanding balances
based on interest rate. Pay off your highest-interest
debts first. But remember to continue paying at least the minimum
amount on the other outstanding balances.

• Consider consolidating outstanding
balances into one convenient payment. You might also be
able to consolidate balances to a lower interest rate, and save on
interest payments.

• Investigate alternatives for paying
down your debt. You may want to consider using money from
your savings account or using another alternative to help you pay
down your debt.

• Source your available payment
options. Some lenders offer a variety of payment methods.
See what’s available and use the option best suited to
help you pay on time, every time.

• Utilize services such as American
Express Account Alerts to help you remain aware of your
due dates and spending levels.

• Talk to your lenders if
you’re struggling to make your payments. Don’t
skip the payment altogether, as this will only make the situation
worse and impact your credit rating. In many cases, lenders are
willing to work out a solution with you.

Budgets build healthy habits

How to prepare a budget

1. Track your income and expenses: Over
a two-month period, keep records of all your money coming in
(income) and going out (expenses). Certain expenses may be fixed
each month, including rent, mortgage, groceries, insurance
premiums, utilities and transportation. Other expenses may vary
– such as vacations, entertainment and gifts.

2. Create your budget: It is recommended
that you prepare the budget for one month so you can directly
compare your monthly expenses against your income. You may also
choose to complete your budget from a household point of view. If
this is the case, be sure to consider income from all contributing
household members and the total of everyone’s monthly
expenses.

3. Follow your budget and keep track of your
spending: When you have a good record of where your money
is going, see if you can cut costs in certain areas. Or, see if you
can add to your savings.